Are Two Household Incomes Really Better Than One?

Not too long after our first child was born, the Honeybee left her position as a paralegal for a bankruptcy attorney to become a stay-at-home mom. It was a decision that we had both happily agreed to before we were even married. That course of action effectively turned us into a single income family, and it’s a decision I’ve never regretted for one moment.

Yes, if the Honeybee had remained working, I figure we probably could have netted more than a quarter-million dollars in additional household income. That’s not too shabby, considering it would have been treated as spare change. Then again, sometimes you just can’t put a price on things — and the intangible benefits of a stay-at-home parent is certainly one of them. At least it is to me.

There is no doubt that fiscally disciplined two-income households can provide monetary benefits that a single-income household can’t. The trouble is, more often than not, two-income households become ensnared in the infamous two-income trap. That is, most couples tend to put themselves at risk by spending to their household income level, rather than taking advantage of that second paycheck by using it to boost their retirement nest egg contributions, emergency savings accounts, and kids’ college funds.

Needless to say, a two-income family that ends up depending on every penny of household income to cover the monthly bills ends up being just as vulnerable to financial problems in the event of a job loss as a single-income family. Then again, maybe even more so, considering a two-income household is arguably twice as susceptible to a job loss.

There are advantages and disadvantages to both one- and two-income households. Just remember that a household with two incomes doesn’t necessarily guarantee a brighter financial future than one with a single paycheck. That’s because, ultimately, it’s not about how much you bring home, it’s about how much you spend — and save.

Comments

1

Annemariesays

Stepping out of the workforce can make it harder to get back in once the kids are grown, though. I’m running into that now: my husband stayed home with our daughter and I worked, then I left the workforce to care for my parents. (He has a blue-collar trade and had no trouble finding a job, luckily.)

I’ve found miscellaneous part-time jobs through networking and so am luckier than most. And I definitely don’t regret the years with my parents. But it’s hard, and our own retirement is looming.

Yes, reintegration into the workforce after a long time away from it is a BIG drawback for those parents who decide to stay at home, Annemarie. That’s why those who intend to go back to work will need to focus on keeping their skills sharp, maintaining old connections, and/or starting an at-home business. As you point out, some jobs are probably a lot easier to return to than others.

We did it on a single income and it wasn’t easy, especially when we were just starting out. We live in an expensive area and we had to compete with dual income couples for housing, schools and other resources.

It seems to have been the right decision for us. Now that the kids are adults and the house is paid down, the pressure is off. We don’t have to look back and wonder if we did the right thing for the kids. And, the pressure to provide caused me to step up in my career.

It was a lot of pressure on us too, Bret. Same issues, including competition for housing, and the struggle to make ends meet for a few years because we had really stretched ourselves early on. So we didn’t do much in the way of entertainment those first few years. In the end, however, it’s all been worth it!

My friends and I are all getting married right about now, and the group converstations on the subject of having a stay at home parent are interesting. for our group,it largley comes down to whether one partner can provide a stable income to support a family. If both partners are in a risky or low paying job, both keep working. If one partner has the ability to provide a good stable salary, one adult stays home.

we were dual income and then the layoffs hit and the boyfriend was laid off, so we switched to a one income family with me working while he stayed home with our son. now that the kid is grade school aged we are transitioning back to a two income family and the hardest part is not spending to our income level. i know we can make it on one salary…we did it for years, why is it so hard to just bank his money?!?! i need to set up automatic transfers quickly.

My mom was always a stay-at-home mom, from Day One, which worked fine since my parents were never big spenders. Since they immigrated here and didn’t have any family or friends to help them during hard times, they prioritized “security” first and foremost. That meant paying off the mortgage as quickly as possible (which they did in less than 10 years) and starting my college fund before I was in kindergarten (they ultimately could afford to send me to an out-of-state university). I think I learned most of my PF skills from them!

We went from a 2 income household to a 1 income household for a few months and I was surprised how we were getting by. It made me think we could’ve been using that second income to get out of debt and build up an emergency fund. Now we know better.

We used to be duel income earners but my wife is now part time. She teaches piano and can work from our house. This definitely saves us money on child care. Pay for someone to take care of our 3 small kids would be expensive, plus the gas we save from only driving one car. We both know its better to have just me as our sole income earner, plus my wife can work on her websites and other hobbies she likes.

After staying home for several years when the kids were little, we decided I should go back to work, but then I did some calculating on the things I did routinely that I wouldn’t be able to do anymore:

keeping the woodstove loaded which really cut down on heating costs, baking all our bread from scratch, growing a large garden and then either canning or freezing the results, sewing clothes for all of us (I even made HH a blue plaid leisure suit circa 1979!) and making presents for very many extended family members.

Then I added up the additional costs related to going back to work: childcare, gas, a second car, work-related clothing, etc.

I forget the numbers, but it would have cost us a fortune for me to go back to work! So I stayed home and saved us a pile of money.

That’s awesome, GaGa. Sounds like you made the right decision for you!

19

Samuel Ssays

I agree whole-heartedly. My wife has already said she plans to be a stay-home parent. That doesn’t mean she can’t work though; she’s already planning to work form home, so that she can be there for the kids AND bring in some extra income.
Frankly, she’s going to get the better end of the deal. I’m planning on being as financially smart as possible, so I spend as much time with them as possible.

We are a dual income family by choice. We live on less than one person’s salary, and save the rest for retirement and college.

To be honest, we do it because I cannot stay at home. I start climbing the walls from boredom when my maternity leave gets too long. Instead, I do all the things that need to be done in the house and take care of the kids when I get home and every weekend. Along with this, I get to enjoy mentally challenging work 5 days a week.

I am on a flexible schedule so I pretty much pick up my kids after afternoon nap and we play until dinnertime.

Yikes! Surely you don’t mean mentally challenging work cannot be found by staying at home? I loved it when I was able to stay home. I found plenty to keep me engaged and occupied aside from the housekeeping and childcare and I have a degree in mathematics.

We are a 1.5 income household now. We have been 1.0, 2.0, 1.5 and 1.4. No matter how much I work, my income will never be what it could have been had I decided to focus on my career instead of staying home. However, I don’t care about that at all. We live just fine, and being home with the kids have been fantastic. Even when I did work, I worked from home and it was part time, so I have had incredible flexibility. However, ever since I quit many years ago and then went back to work part time, we always treated my check like a bonus to be spent on savings, vacation, or paying down the house.

I became a full time stay at home mom after my 2nd child was born. Now it is 17 years later and from my observation the most successful dual income families had 2 things: One partner had great flexibility in their schedule, and they had massive outside support…such as willing grandparents or other family members or paid help to pick up the slack. I have returned to work part time now that the kids are in college, but am now thinking of going back to school myself. Both my kids report that they hope to marry women willing to stay at home with their kids…they appreciated having me there.

When we had our 2nd of three kids my wife left the workforce permanently. It was easy and we never missed her pay because I was a high earner and she was not. It was her choice but we never regretted it and it never involved much sacrifice. We are slightly early retired now with ample resources and the kids are all grown and on their own with good jobs.

About 3 years ago my wife left her job to be a stay-at-home mom, and we couldn’t be happier with the decision! Before we had our first we ran all the numbers taking into account paying for child care, tax implications, and lost income and found out that it was essentially a break even between her keeping her job and staying at home. It made the decision a no-brainer!

I agree with this article Len. We’re a one income family and my wife is a stay at home mom with the kids, and we’re very fortunate to be able to do that with my engineering job. My wife does side hustles in social media and marketing. She brings enough money to go on vacation and pay for a few bills every month, which definitely helps a lot.

My youngest is only a year old and my wife would like to start a part-time job (24 Hours/week) or maybe go full time in a year or two. Our plan is to use her wages to help pay off the house, invest more in her retirement and give us more cash to do upgrades on the house.

My question is, how would my wife start to go about bridging the gap with being out of the workforce for 5 years now? Also, with the high cost of day care, when does it make financial sense for her to return to the workforce? It’s not just for the money for her mostly, but to interact with adults and the self-worth of providing. thanks.

Well, Don … I would think it shouldn’t be too difficult for your wife to get back into the workforce after being a stay-at-home mom because she never really left the workforce; after all, her side hustle is a business that has probably kept her skills fresh, right?

As for determining when childcare “makes sense” (at least financially) I would start with the income gained with the lowest-earning spouse’s job and then subtract the cost of childcare, plus transportation expenses (i.e., gasoline, and maintenance costs to offset additional wear and tear on the car), plus work-related clothing and other expenses. Then use that figure to determine whether the second job is really “worth it.”

My wife worked part-time when kids were born until they went to high school…to help with reduced income we maintained and drove our cars forever …this major expense reduction allowed our family to experience vacations, private schools for all 12 years (college scholarships as a result) and a decent home…money was tight but looking back it was worth it !! Oh, we still drive older well maintained vehicles and save the difference .

My wife was disabled by Cerebral Palsy from birth and required complete home care. We never had kids because managing her care so I could work required all of the money raising a couple of kids required. And it never ended.

I was fortunate to have a high-paying job the covered her costs with some left for retirement. I put lots of money in 401K at work which created a nest egg when I lost my job and took a job at half the salary. Talk about downsizing! I went from 75K to 40K in a few weeks! We had to use the 401K to meet her expenses.

So es, be careful about money, save when you can, be conservative by spending money for stuff that have have value to you. BUT SAVE as much as you can.

Surely more money is better than less money? I get it – quality of life should be better for the parent living at home and it also means you save on childcare but if it the couple will make more money with both parents working…shouldn’t they both work?

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